Gas station coffee – they’ve got it made
OPINION: Ever wonder why Z Energy’s ads are all about loving coffee?
It’s because there’s nothing trim about the mark-up on a trim flat white.
The gross margins Z Energy earns on selling the brown, warm fuel of an underslept nation are full fat.
Z Energy’s margins on the luxuries it sells in its forecourt shops became a topic of conversation at Parliament’s health select committee this month.
The committee is examining the next raft of laws designed to get the country to go ‘‘smokefree’’ by 2025, which doesn’t actually mean smokefree, but a country where fewer than 5% of people smoke.
The Government intends to drastically reduce the number of shops that can sell tobacco, and Z Energy is likely to be one that retains the right to sell smokes, thanks to its high-security, camera-monitored sites.
But unhappy dairy owners waved around a chart of Z Energy’s shop sales from an investor presentation.
It’s here that the fat in the fullfat mochaccino was revealed.
Snacks sold in Z Energy’s last financial year: $27 million. The gross margin on them was $10m.
That’s a hefty mark-up for a sugar hit for convenience shoppers.
It sold $49m of beverages, not including coffee. The gross margin was $17m on them.
But these margins pale in comparison to the coffee margins.
On sales of $56m, the gross margin was $30m. And, I might add, this includes offers like getting one ‘‘free’’ coffee for every four you pay for.
I don’t think I have ever seen a clearer a portrait painted of the price of convenience.
Very few of us are paid enough not to need to find ways to keep our spending in check.
Our money has to stretch to do two things in our lives.
It has to cover our daily living costs, and it has to enable us to build enough wealth so that when we can no longer work, we have the resources to live decently, and pay for healthcare.
But, humans being humans, we need a bit of play money.
We can’t survive on necessities alone. We’re not a nation of St Jeromes.
We need luxuries, even modest ones.
But it really seems to me that service stations, and other sellers of convenience luxuries, are earning much too much from us for us to ignore.
There’s a popular perception that dropping your daily coffee, or daily store-bought lunch, or not getting a pie every time you fill up the car, is a hardship.
It really isn’t. There’s a coffee machine at work, and I have a plunger at home.
I chose many years ago to not be a convenience food and drink shopper.
It’s made things that little bit easier, and it’s not because I live a St Jerome lifestyle.
The value of this habit has been far lower than the decision for our household to run only one car, but it’s helped us prosper.
It may well be coffee is your essential luxury, and that is your choice. But remember; there’s an opportunity cost to each purchase.